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Tax season 2022 is nearly upon us. The earliest you can file your taxes is Jan. 24, and the tax filing deadline this year is April 18 (Tax Day). When tax season starts, you may want to consider filing your tax return as early as you can.
Parents can often benefit from filing early, but this year in particular, there are a few reasons why they may want to file their 2021 taxes as soon as possible.
4 reasons parents should file their taxes as soon as possible
There are a number of changes to this year’s taxes because of coronavirus-related laws like the American Rescue Plan Act of 2021. Some of those changes will make it beneficial for taxpayers to do their taxes earlier in the season.
1. You benefited from the advance child tax credit
The advance child tax credit payments were only half of your total 2021 child tax credit. When you file your income tax return, you will receive the other half of the credit as part of your tax refund (assuming you’re getting a refund this year).
The child tax credit was only expanded for 2021 (thanks to the American Rescue Plan Act of 2021). The advance payments won’t continue in 2022 unless Congress passes new legislation. In lieu of more advance payments, parents can at least file their tax return sooner so they can receive the rest of their child tax credit.
Here are some other tax credits and deductions you can claim in 2022.
2. You didn’t get your full stimulus check
The third round of COVID-19 stimulus checks started in March 2021. If you didn’t get your check or got less than you should have because you had a child in 2021, you can receive your full payment by claiming the recovery rebate credit on your tax return.
You can also claim this credit if you received less than you should have because the Treasury used an old income figure (from 2020 or 2019) to calculate your credit amount, but your 2021 income was lower and would qualify you for a bigger payment. Can’t remember how much you got for the third check? Look at the letter the IRS sent you earlier this year (Notice 1444-C) or wait for Letter 6475, which the IRS will mail you in early 2022.
3. You’re expecting a refund
If you’re expecting a refund this year, filing sooner will mean you get your refund sooner. One exception is that if you claim the earned income tax credit or additional child tax credit for 2021, the law dictates that the IRS must wait until at least mid-February to send your refund, regardless of how early you file.
4. Filing early can help protect you from identity theft
One type of tax fraud and identity theft that criminals use is to file a return with a stolen Social Security number so they can claim the refund early in the year. The person whose SSN was stolen likely won’t realize until they try to file a return later on and have it rejected. To protect yourself, file your taxes as early in the year as possible. Filing early also helps protect anyone on your return, like your spouse and dependents, because a criminal won’t be able to submit a fraudulent return for one of them either.
4 reasons you may want to wait to file your taxes
A lot of tax filers could benefit from filing their taxes sooner, but many people could also benefit from procrastinating on their taxes. Here are some situations where you may want to wait until later in the filing season to do your taxes.
1. You will owe a tax bill
If you owe a tax bill for 2021 taxes, you need to pay it by April 18, 2022, to avoid any possible penalties and interest on your bill. That means you can also avoid your bill for as long as possible by waiting until April 18 to pay it. If you need help paying your tax bill, the IRS offers payment plans.
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2. You still plan to make contributions for 2021
It’s still possible to make 2021 contributions to certain accounts, such as traditional IRAs, until Tax Day. So if you plan to make more contributions for the 2021 tax year and those contributions will affect your tax return, like in the case of the IRA deduction, you may want to wait until as close to April 15 as possible to file your taxes. Remember that if you’re married, you can also contribute to your spouse’s IRA.
3. You are waiting for tax documents
Filing your taxes could be difficult or impossible if you don’t have all the necessary tax documents. So if you’re waiting for a tax document, do your best to get it before you try filing your taxes. Looking for a tax document from a previous year? You may want to request a tax transcript from the IRS.
4. You plan to request a tax extension
If you can’t or don’t want to file your tax return by April 18, you can get six more months by requesting a tax extension. Tax extensions are automatic as long as you file Form 7004 with the IRS by Tax Day. Just make sure you still pay any tax bill by Tax Day. An extension gives you more time to submit your forms to the IRS, but you still need to pay your tax bill (or at least your estimated tax bill) by April 18.
Were you affected by a fire, flood, tornado, or other natural disaster in 2021? You may already have extended deadlines to file. Learn more about IRS tax relief for victims of natural disasters.
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